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Could Mandatory Insurance Prevent Vacant Building Blight?

Abandoned factories litter the landscapes of cities and towns throughout the Rust Belt. A new paper proposes an innovative solution to help prevent vacant buildings from plaguing a community before a building is ever constructed.

"Buildings crumble much less easily than the companies inside them do. And because of this reality, whole communities, particularly in the industrial Midwest, are littered with ghostly manufacturing plants that once produced automobiles, or the parts that went into them, or the components of those parts," writes Emily Badger.

Many communities have been successful in utilizing tax credits, grants, and private investment to reuse these legacy assets, but Rex LaMore and Michelle LeBlanc, at Michigan State University, have proposed [PDF] a solution that would use property insurance to "force companies to financially plan for a property's end-game" from the start.

"LaMore envisions that an entirely new industry could form around commercial property insurance and deconstruction, with some interesting consequences," adds Badger. "Insurers would be motivated to keep close tabs on the condition of properties and what goes on inside of them. Irresponsible companies and the dirty industries most likely to leave a mess at the end of the day would have higher insurance premiums. The whole system, LaMore suggests, might even prompt the development of new building techniques or materials that leave a lighter footprint on the land."